How to Analyze the Results of Non-Finance Companies

Hello, I am Umesh Tripathi, and we are learning the concepts of Fundamental Analysis. 
In this video, we are going to understand the sense of earnings conference calls for evaluating a company. 
We will learn what earnings conference calls are, how they give us real-time insights about the company, and what inferences we can draw from them. 

Basically, when we are analyzing companies, there are several stages of analysis. 
Fundamental analysis is, of course, one of them. 
Through fundamental analysis, we understand how the company’s overall fundamentals are performing. 

Apart from that, there are certain events that companies organize especially after their quarterly financial results. 
Through such events, we get insights about the company and understand what the overall management plans are. 

So, basically, an earnings conference call is nothing but a kind of teleconference or webcast where company management discussions happen. 
These discussions usually take place after the company releases its quarterly financials and are typically held after the earnings are announced on exchanges like NSE and BSE. 

So, after the earnings are announced, such teleconferences or webcasts are held which we call earnings conference calls. 

In these calls, CEOs, CFOs, Investor Relations Heads, analysts, and sometimes even media participate. 
If we are shareholders of the company, we also receive invitations to attend such conferences. 
However, it is not mandatory for every investor to participate in these kinds of events. 

In earnings conference calls, mostly management commentary happens, followed by question-and-answer sessions. 

Now the question arises what is the purpose of these conference calls? 
The company already publishes its financial reports, i.e., the quarterly reports. 
So why are these calls necessary? 

These kinds of conference calls basically give us real insights into what is actually happening inside the company insights that often go beyond what is published in the earnings reports. 

Because whatever is in the earnings report, as investors and analysts, we can already see. 
But apart from that, what discussions are happening about overall developments? What plans are in the pipeline?  these are all discussed by the management during such conference calls. 

So, basically, these calls provide us with several important pointers about the business directly from the management. 

Let’s take an example. 
Suppose there is a company named ABC having a conference call, and during this call, they are providing real insights. 

The company ABC explains that the drop in margins is due to rising input costs and semiconductor shortages. 
This company happens to be a semiconductor firm. 
Recently, we have seen news that there is a shortage of semiconductor devices. 

So, what happens in such a case is that the company has released its quarterly results, but this particular news and outcome are not reflected in those results. 
Through the conference call, the management provides insights into what could be the possible future outcomes after this quarter’s results. 

Hence, this conference call gives us important information that is not available in the quarterly reports. 

Now, let’s look at a few real examples of questions and answers. 

Suppose an analyst attending the conference call asks 
“What are the challenges the company is facing in its current business segment, and how is it planning to progress in the next few months? What are the pricing strategies?” 

The company management provides clarity on these questions. 
Along with that, some segment-level performances that were not shared in the press release are also discussed in this conference call. 

So, in these conference calls, we get information that is not found in the quarterly results, but answers to such points are provided during the calls. 

Basically, the information we get from these conference calls helps us separate facts from speculation and also helps us make informed investment decisions. 

As far as forward guidance and strategic plans are concerned, the management usually discusses such strategies in these forums through conference calls where they talk about their future plans and business pipeline. 

They have a roadmap a clear roadmap of what is coming in the future in terms of overall business progress. 

So, any company that is in a certain business actually tries to progress further in that business in the coming years. 
Hence, they would have a proper roadmap. 
But these kinds of roadmaps are not discussed in the quarterly results. 

So, through these conference calls, we get to know what the company’s roadmap is for the next three to four years in the business segment it belongs to. 

For example, there is a company called ABC Motors. 
This company is guiding for strong electric vehicle segment growth and margin improvement in FY2025, which has led to a stock re-rating. 
Its rating has improved. 

Another example ABC Power. 
The management of ABC Power has planned to expand its solar production capacity to 10 gigawatts by 2026. 

This kind of information, which we actually get from such conference calls, helps us make strategic decisions. 

Companies discuss their expansion plans, capital expenditures, or cost-cutting strategies during these conference calls. 

So, earnings conference calls aren’t meant for in-depth analysis, but they offer transparency, accountability, and future direction. 

They help both retail and institutional investors make investment decisions. 
Above all, participating in these kinds of conference calls actually helps us more than just reading earnings reports. 

Always remember smart investors follow both numbers and narratives. 

That’s all in this video. 
See you in the next video. 

Investments in securities markets are subject to market risks. 
Read all related documents carefully before investing.